MID EXAM

BUSINESS LEGAL ENVIRONMENT AND ETHICS

ASSIGNED BY: SANTOSH BARNAWAL

SUBMITTED TO:HIMALAYAN COLLEGE OF MANAGEMENT

By Sirish Shrestha
MBA 3rd Semester
2019 INTAKE
In context of Contract Act 2056 describe the term breach of contract? Explain the Four kinds
of damages and their remedies for the breach of contract.
Answer:
Breach of Contract
Where the promisor neither performs his contract nor does he tender performance or where the
performance is defective , there is breach of contract.
According to Contract act 2056,”In case any party of contract does not meet liability under the
contract , or gives a notice to a other party that he/ she will not perform the work to be
performed, or in case his/her action or conduct shows that he/ she incapable of performing the
work under the contract, he shall be deemed to have breached the contract.”
Breach of contract occurs when:
 A party declares his intention of not performing before the performance is due.
 Actual breach of contract
I. On Due date of Performance
II. During the course of Performance

Basically, Breach of contract is the failure to perform what a party is under a duty to perform.

Damages for the breach of contract

Here are the 4 damages of the breach of contract:
a) Compensatory Damage
Compensatory damages are monetary damages that are awarded with the intent of
compensating the non-breaching party for any losses suffered as a result of a contract
breach. They are not designed to punish the breaching party, but merely make the party
that was breached against “whole again,” as it is commonly phrased.

b) Liquidation Damage
Liquidation damages are damages that are stated specifically in the contract. They can be
put in a contract when damages are difficult to foresee, and an estimate is necessary for
damages should there be a breach. Thus, such damages are agreed upon by both parties
during the contract negotiation.

c) Punitive Damage
Punitive damages are damages designed to punish a breaching party and deter parties
from committing breaches. Such damages are rarely awarded for contract breaches,
however, although they may be awarded in some tort or fraud cases that overlap contract
cases.
 d) Nominal Damage
Nominal damages are dispensed when the injured party did not suffer a monetary loss,
but a judge wants to show that the injured party is in the right. Generally, nominal
damages are very small in amount and are more symbolic in nature.

Remedies for Damages of Breach of Contract

Remedies for the Damages in Breach of contract are:
I. Rescission
Rescission is the voiding of a contract not recognized as legally binding. The
courts can free non-liable parties from their agreed obligations and, when
possible, will effectively seek to restore them to the position they were in before
the contract was signed.

II. Compensation
According to Contract act 2056, Compensation as remedies has been defined as
follows:
i. Compensation for actual loss
In case a contract has been breached under Section 82, the aggrieved party
may realize from the party who has broken the contract, the actual loss or
damage suffered by him/her a result of such breach of contract of the loss
or damage, which the contracting parties had anticipated at the time of
signing the contract.

ii. Amount of compensation is mentioned

In case the contract provides that any specific amount or compensation shall be
paid in the event of breach of contract, the aggrieved party may recover from
the other party a reasonable amount not exceeding that amount.

iii. Amount of compensation not mentioned

In case the amount of compensation is not mentioned, the party making a claim
for such compensation may realize a reasonable amount in consideration of the
direct and actual looser damage that has resulted form the breach of contract,
or in consideration of the breach of contract, or in consideration of the breach
of contract, or in consideration of compensation. No compensation may be
recovered for any indirect or imaginary loss or damage.

III. Restitution
Restitution is a remedy which can operate alongside or distinct
from contractual or tortious claims, and which can be available in a claim which
arises either as a matter of law or in equity. Restitution restores the claimant to the
position it was in before the defendant had been unjustly enriched at its expense.
IV. Injunction
Injunctions are court orders that compel a party to take a specific action or refrain
from doing something. They are considered to be equitable remedies because they
address issues that cannot be remedied with monetary damages. Injunctions can
be entered as a judgment order for an active lawsuit or can be filed as a separate
request directly with the court.